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4 Things to Consider Before Starting an IT Consulting Business

Oct 19, 2018, 09:29 AM

Deb Ziff Soriano

As the lead for information security at Chicago Public Schools in 2013, Edward Marchewka wanted a way to measure how well the nation’s third largest public school district was doing at protecting its sensitive data.

Marchewka couldn’t find a model he liked, so he built one.

It didn’t take long for him to see that there was a market gap for aggregating IT and information security metrics – one that he was well-positioned to fill. In 2015, he formed CHICAGO Metrics™, a platform that helps companies tell a better story by managing their key IT and information security risks.

Starting your own IT consulting business can be both enticing and intimidating. You exchange a corporate safety net for flexibility and autonomy. See below for tips on how to make that transition a success.

Be prepared to be a jack-of-all-trades.

When you start an IT consulting business, you’re no longer solely focused on your area of IT expertise. You’re also in charge of project management, bookkeeping, contracts, legal matters related to starting a business, and potentially, employees.

“There’s a lot of behind-the-scenes activities with running and growing a business that most people don’t see and know unless they’re doing it,” says John Sterrett, founder of Austin, Texas-based Procure SQL, which specializes in SQL Server solutions.

He adds that as a consultant, employability skills – such as an ability to communicate with clients – can be just as, if not more, important than technical skills.

“If you’re going to be a consultant, at the end of the day, you’re selling hours,” he says. “You’re trying to help people. That’s how you’re staying in business. Being able to be quiet and listen can be very, very critical. I think even more so than the tech skills.”

Build in time for growing pains.

Sterrett recommends having a business plan. It doesn’t need to be a lengthy, formal document, but writing down goals – and the milestones you need to hit to meet those goals – can go a long way.

That plan should include a period of months where you may not be able to pay yourself a salary, thanks to early startup costs and other growing pains, such as building a customer base. Make sure you’ve got at least three to six months of living costs saved before embarking on a consulting business, recommends Sterrett.

Be prepared to face some failure.Some early hiccups can be a good opportunity to refine your IT consulting business.

“A lot of people are afraid of failure,” Sterrett says. “When running a business, it’s probably good to fail as fast as you can, so you can figure out what works and what doesn’t, and keep moving in the direction of your goals.”

Know your competitors and find your niche.

You need to be able to differentiate yourself: whether it’s through your pricing, your bundle of services, your expertise, or the types of clients you serve.

“Knowing where you fit in and who your competitors are is really important in this space,” Marchewka says.

Finding the right price point for your services can be tricky. Do your homework on what competitors are charging, but it may take some trial and error to find your sweet spot.

Marchewka says he discovered he was turning off bigger clients who assumed his bargain basement prices meant the quality must be low.

“Don’t undervalue yourself,” he says, adding that he’s been able to take on nonprofits and governmental clients by offering discounts to applicants who show need.

Network to generate business.

Marchewka started his business with two clients in hand, but he says generating new business is one of the hardest parts of going-it-alone.

“I like having the solutions, but generating the business is hard,” he says. “It requires work.”

Rather than hiring an expensive sales force, Marchewka says he partners with other vendors who have complementary products, building clients through a word-of-mouth network.

Sterrett recommends making sure you’re not relying on just one big client. Hedge your bets by diversifying your roster of clients.

Build your network at events and conferences. Sterrett says he meets people by speaking at SQL Server conferences. Marchewka says he nabbed a major client after someone from the organization saw him speak at an event.

“Don’t be afraid to get on a stage and present yourself as that expert in your space,” Marchewka says. “People will recognize that and follow up with you.”